Carrier Scammed on AT&T Sales Tax?

[nikhsub1]

I live in California. You do not pay sales tax on the retail value of a vehicle regardless of whether you lease or purchase. If you lease, you only pay tax on the lease payments and if you choose to buyout the car you only pay tax on buyout amount. In neither case do you pay tax based on the sticker price, you pay tax based on the actual value of the vehicle as determined between you and the seller.

My statement was entirely correct although I noticed that you glossed over the fact that I quoted "sales" tax and replaced it with you claiming that one pays tax on "renting" in your misguided attempt to invalidate my statement. You can't change the meaning of my statement and then call your changes invalid; that's a strawman fallacy.

I didn't gloss over anything. You said that one doesn't pay sales tax on a lease, this is not true. You are taxed on the lease payments that you make - so if your lease is $100 a month and your tax rate is 9%, every month you pay $109. No one said anything about MSRP - in car buying you typically haggle for a price - with phones and Apple you do not. I think we both might mean the same thing, the way you said it was not correct though even if it isn't what you meant.

 

[BR3W]

I didn't gloss over anything. You said that one doesn't pay sales tax on a lease, this is not true. You are taxed on the lease payments that you make - so if your lease is $100 a month and your tax rate is 9%, every month you pay $109. No one said anything about MSRP - in car buying you typically haggle for a price - with phones and Apple you do not. I think we both might mean the same thing, the way you said it was not correct though even if it isn't what you meant.

What do yo mean "no one said anything about MSRP?" The entire thread is about MSRP! It's not a requirement that every single reply restate the premise of the thread...

Additionally, even the way I wrote it was correct you simply continue to straw-man what I wrote rather than admit you misread what I wrote.

I wrote leasees don't pay "sales" tax in quotes to distinguish it from the amount of tax paid on the monthly lease amount, which you later wrote as "renting" amount further demonstrating you knew exactly the distinction I was making.

 

[nikhsub1]

What do yo mean "no one said anything about MSRP?" The entire thread is about MSRP! It's not a requirement that every single reply restate the premise of the thread...

Additionally, even the way I wrote it was correct you simply continue to straw-man what I wrote rather than admit you misread what I wrote.

I wrote leasees don't pay "sales" tax and that's absolutely correct. I even put it in quotes to distinguish it from the amount of tax paid on the monthly lease amount, which you later wrote as "renting" amount demonstrating you knew exactly what I was distinguishing between.

Now you're being obtuse. You DO pay sales tax on a lease, period. And it is SALES TAX and based on your SALES TAX rate in the county in which you live.

 

[BR3W]

Now you're being obtuse. You DO pay sales tax on a lease, period. And it is SALES TAX and based on your SALES TAX rate in the county in which you live.

But it's not based on the retail price in any state and it's not based on the sales price on most states, which is what the thread is about. You are being nothing more than pedantic and creating straw-men out of my replies.

Also, since you apparently enjoy being pedantic, you do *not* pay "sales" tax on a lease. Leases are subject to "use" tax in California.

 

[nikhsub1]

But it's not based on the retail price in any state and it's not based on the sales price on most states, which is what the thread is about. You are being nothing more than pedantic and creating straw-men out of my replies.

You can't be helped I'm afraid. You said, "you don't pay 'sales' tax on a lease". This is wrong, full stop. Not sure why you are arguing otherwise.

 

[BR3W]

You can't be helped I'm afraid. You said, "you don't pay 'sales' tax on a lease". This is wrong, full stop. Not sure why you are arguing otherwise.

Because according to Board of Equalization, one pays "use" tax on a lease in California.

If your dealership is too lazy to change the line item on your contract that doesn't change the law or your ignorance to the law.

 

[nikhsub1]

Because according to Board of Equalization, one pays "use" tax on a lease in California.

If your dealership is too lazy to change the line item on your contract that doesn't change the law or your ignorance to the law.

It is Sales/Use tax and is BASED ON YOUR SALES TAX RATE. You fail.

 

[BR3W]

It is Sales/Use tax and is BASED ON YOUR SALES TAX RATE. You fail.

The amount you pay if you purchase a vehicle is the state and local tax rate calculated from the value of the vehicle at the time of purchase.

The amount you pay if you lease a vehicle is the sate and local tax rate calculated from the lease payment and of the residual value at the end of the term if you choose to buyout.

There is never a situation in California where you pay sales tax on a vehicle based on the MSRP and there is never a situation in California where you pay sales tax on a leased vehicle based on the MSRP or even the retail value because it's not a sale when you lease it just as I wrote earlier.

I wonder if people are enjoying you twisting my position and your own argument around so much in order to try and create a valid claim rather than simply admit you were wrong.

 

[DoofenshmirtzEI]

Scratching my head trying to figure out who claimed that you pay sales tax on a car based on MSRP. As far as I can tell, nobody made that claim. Certainly nobody you are arguing with now. It doesn't look like any posts have been deleted which might have made that claim.

The only reason MSRP came into it on the phone is that MSRP is what the phone actually sells for (street retail price), which is not the case with most cars. The OP's post has to do with not getting to offset the sales price of a new phone by the unpaid balance of the old phone for the purpose of figuring sales tax.

 

[nikhsub1]

The amount you pay if you purchase a vehicle is the state and local tax rate calculated from the value of the vehicle at the time of purchase.

The amount you pay if you lease a vehicle is the sate and local tax rate calculated from the lease payment and of the residual value at the end of the term if you choose to buyout.

There is never a situation in California where you pay sales tax on a vehicle based on the MSRP and there is never a situation in California where you pay sales tax on a leased vehicle based on the MSRP or even the retail value because it's not a sale when you lease it just as I wrote earlier.

You can't be helped I'm afraid. You said, "you don't pay 'sales' tax on a lease". This is wrong, full stop. Not sure why you are arguing otherwise.

 

[BR3W]

Scratching my head trying to figure out who claimed that you pay sales tax on a car based on MSRP. As far as I can tell, nobody made that claim. Certainly nobody you are arguing with now. It doesn't look like any posts have been deleted which might have made that claim.

The only reason MSRP came into it on the phone is that MSRP is what the phone actually sells for (street retail price), which is not the case with most cars. The OP's post has to do with not getting to offset the sales price of a new phone by the unpaid balance of the old phone for the purpose of figuring sales tax.

Post #3 was edited after the discussion was under way. I quoted a portion of it in Post #11 and you can see that at least the portion I quoted was changed from "lease" to "finance."

I brought the MSRP issue up in post #33 and pointed out that if someone wants to be mad about something, rather than the issue the OP was concerned about, then raise issue about the unique tax structure levied against cellular devices in California.

Phones never sell for MSRP, yet California is one of two states that charges sales tax on cellular devices calculated from MSRP so most of the thread is trying to clarify to people not in California that it's a unique situation that applies only to them and not industry standard as being incorrectly claimed by others in the thread. The remainder of the discussion is a couple people trying to engage in a nitpicking discussion about my post #11 that was responding to post #3 pre-edit.

 

[Applejuiced]

The question he was asking wasn't whether he should pay taxes at all, but rather whether taxes on the unpurchased portion of an item should have been credited back to him.

If it was a car, it would have been.
You can't argue that since it's not a car, and it's like a TV, then you shouldn't expect to receive a tax credit on a returned amount. If you buy a TV from walmart and use it for 6 months and then return it to the store, you will get the full sales tax amount credited back to you if they accept the return.

He's not returning it though.
He is trading/selling it back to the carrier and starting a new plan if that's what he chooses to do. Or he can keep it and pay it off.
And you will not be able to return a TV after 12 months of use.
Not sure what kind of analogy you're trying to make but bottom line is he has to pay tax period.

 

[BR3W]

He's not returning it though.
He is trading/selling it back to the carrier and starting a new plan if that's what he chooses to do. Or he can keep it and pay it off.
And you will not be able to return a TV after 6 or 12 months of use period.
Not sure what kind of analogy you're trying to make but bottom line is he has to pay tax period.

I wasn't drawing any kind of analogy.

You incorrectly stated this:

"Most states require taxes to be paid up front. They don't care it's being leased, they see it as you bought a full priced device."

and I corrected you with this:
"You shouldn't pay sales tax on a lease. It *does* matter because leasing is not buying.

If you lease a car you won't pay "sales" tax until/unless you choose to buy it out in the end. Reducing the purchase price is one of the main benefits of leasing."

Then you edited your post after I wrote my response, which was 100% percent correct.

 

[Applejuiced]

I wasn't drawing any kind of analogy.

You incorrectly stated this:

"Most states require taxes to be paid up front. They don't care it's being leased, they see it as you bought a full priced device."

and I corrected you with this:
"You shouldn't pay sales tax on a lease. It *does* matter because leasing is not buying.

If you lease a car you won't pay "sales" tax until/unless you choose to buy it out in the end. Reducing the purchase price is one of the main benefits of leasing."

Then you edited your post after I wrote my response, which was 100% percent correct.

I did not state any of the above you're posting. And I did not edit my posts, I think you're starting to lose it or have me confused with another poster
Go back and look. I only posted 3 times in this thread.
I don't know why you're keep bring up car leases and car tax laws since this has nothing to do with any that.

 

[DoofenshmirtzEI]

Post #3 was edited after the discussion was under way. I quoted a portion of it in Post #11 and you can see that at least the portion I quoted was changed from "lease" to "finance."

I brought the MSRP issue up again in post #33 and pointed out that if someone wants to be mad about something, rather than the issue the OP was concerned about, then raise issue about the unique tax structure levied against cellular devices in California.

That post never said anything about MSRP. Given that none of this discussion involves phone leases (a practice which I don't think is at all widespread), the edit was an understandable fix of an error in terminology. This whole do you or don't you pay sales tax on leases thing is a digression and nothing to do with the OP. It is clear that you do pay sales tax on leases in a wide variety of states, and the fact that it is called "use" tax somewhere doesn't change the fact that outside of bean counters and tax lawyers, everybody understands that the general term sales tax includes use tax.

Phones never sell for MSRP, yet California is one of two states that charges sales tax on cellular devices calculated from MSRP so most of the thread is trying to clarify to people not in California that it's a unique situation that applies only to them and not industry standard as being incorrectly claimed by others in the thread. The remainder of the discussion is a couple people trying to engage in a nitpicking discussion about my post #11 that was responding to post #3 pre-edit.

Strange, I just bought a phone for MSRP, and a helluva lot of people posting here also just bought a phone for MSRP.

 

[BR3W]

I did not state any of the above you're posting. And I did not edit my posts, I think you're starting to lose it or have me confused with another poster
Go back and look. I only posted 3 times in this thread.
I don't know why you're keep bring up car leases and car tax laws since this has nothing to do with any that.

I confused your username with AppleFan.

He's imagining I said something that I didn't and then tries to argue with things I didn't even say lol

I brought up those issues in response to AppleFan's original post and others' subsequent posts about comparing car financing and leasing to device financing. Since I already pointed out where this occurred in post #61 I assume you are trying to engage in a "gotcha" discussion rather than engage in a good faith discussion.

 

[Applejuiced]

Nope, just trying to clear it up.
What many were doing earlier was confusing the whole thing with financing a car, leasing car payments, trade in values of a car when registering it with the DMV and all kinds of crazy analogies that don't pertain to this topic IMO.
So lets make it easy to understand.
People will have to pay tax on their device in full and AT&T doesnt pay for the tax and they dont spread it all out and included in the next payments correct?

 

[BR3W]

That post never said anything about MSRP.

You don't know what it said originally. You already posted that you didn't see any posts that were deleted and weren't aware that post was edited until I showed you, so your opinion about what it said or didn't say before the edits is irrelevant.

Strange, I just bought a phone for MSRP, and a helluva lot of people posting here also just bought a phone for MSRP.

Obviously the context of the discussion frames the responses within purchasing devices on cellular plans. If you are purchasing devices at MSRP from your cellular provider then that's on you. If you are purchasing phones from Apple Store or any other retailer then it's outside the context of this thread.

 

[BR3W]

Nope, just trying to clear it up.
What many were doing earlier was confusing the whole thing with financing a car, leasing car payments, trade in values of a car when registering it with the DMV and all kinds of crazy analogies that don't pertain to this topic IMO.
So lets make it easy to understand.
People will have to pay tax on their device in full and AT&T doesnt pay for the tax and they dont spread it all out and included in the next payments correct?

Only in two states.

In the other 48 states customers should only be paying tax on their agreed upon purchase price and there are only a few states that require it up front.

If you finance a device and your cellular company charges you the full sales tax amount up front but you don't end up keeping it to term, you should be able to request a refund but might have to do it through your state tax board. In any other case, the retailer will refund you the amount so it's strange that the cellular companies are not doing so for their customers. Given that tax laws regarding cellular devices are unique it's not an unreasonable question to wonder whether cellular companies are acting outside the norm.

 

[Applejuiced]

Only in two states.

In the other 48 states customers should only be paying tax on their agreed upon purchase price and there are only a few states that require it up front.

If you finance a device and your cellular company charges you the full sales tax amount up front but you don't end up keeping it to term, you should be able to request a refund but might have to do it through your state tax board. In any other case, the retailer will refund you the amount so it's strange that the cellular companies are not doing so for their customers. Given that tax laws regarding cellular devices are unique it's not an unreasonable question to wonder whether cellular companies are acting outside the norm.

Unfortunately I live in one of these 2 states
Again, you're seeing it as not keeping it or returning it to the store.
Its not really a return, You don't return a product for a refund after 2 years of use correct? You're basicly selling it back to the carrier and they in term sell it used for whatever amount they can get.
Its not a returned device after 12-18 or 24 months.
Kinda like those rent a center places and colortype or other appliance rental stores.
There is taxes on your monthly or weekly payments. You dont get to ask for the tax back if you give back the washer and drier and you don't get your taxes back if they come and take your TV back from your apartment if you stopped making payments on it after 8 months. Correct?

 

[DoofenshmirtzEI]

Nope, just trying to clear it up.
What many were doing earlier was confusing the whole thing with financing a car, leasing car payments, trade in values of a car when registering it with the DMV and all kinds of crazy analogies that don't pertain to this topic IMO.
So lets make it easy to understand.
People will have to pay tax on their device in full and AT&T doesnt pay for the tax and they dont spread it all out and included in the next payments correct?

Correct. No sales tax is charged on the Next payments, the sales tax is charged up front. In my state, on a contract, you only pay sales tax on the actual price you pay ($299 or whatever), but then there is sales tax on the line charge that subsidizes the purchase price.

As for whether you should get a rebate of sales tax paid if you trade the phone in before you pay it off, several states allow trade ins to net against the selling price of a new device for the purpose of lowering sales tax, but only to the extent that they lower the purchase price of the new device. Since trading in the phone results in zeroing out the remaining balance on the old financing contract and doesn't lower the price of the new device, there is no lowering of the sales tax due. If we have to go back to the car analogy, it's like bringing a trade in worth $20K that still has a $20K balance on its financing contract. The dealer may accept it in trade, and pay off your balance, but it isn't going to lower the $40K negotiated price on the new car you want, so no sales tax abatement. A cellular carrier can't rebate you sales tax that the state doesn't allow. So there is no scam.

 

[BR3W]

Unfortunately I live in one of these 2 states
Again, you're seeing it as not keeping it or returning it to the store.
Its not really a return, You don't return a product for a refund after 2 years of use correct? You're basicly selling it back to the carrier and they in term sell it used for whatever amount they can get.
Its not a returned device after 12-18 or 24 months.

I'm not actually seeing it that way.

You'll notice in his original post his contract charged him for an "estimated" tax, which was based on the assumption that he would pay X amount of value over the life of his contract. If he ends his contract, or changes the terms, and enters into a new contract for a new device, he is entitled to be refunded the amount that he did not end up buying.

Even in California, where we are required to pay tax based on the full MSRP of a device up front, if we don't finance the device to term we can apply to the Board and get a refund.

 

[Applejuiced]

Correct. No sales tax is charged on the Next payments, the sales tax is charged up front. In my state, on a contract, you only pay sales tax on the actual price you pay ($299 or whatever), but then there is sales tax on the line charge that subsidizes the purchase price.

As for whether you should get a rebate of sales tax paid if you trade the phone in before you pay it off, several states allow trade ins to net against the selling price of a new device for the purpose of lowering sales tax, but only to the extent that they lower the purchase price of the new device. Since trading in the phone results in zeroing out the remaining balance on the old financing contract and doesn't lower the price of the new device, there is no lowering of the sales tax due. If we have to go back to the car analogy, it's like bringing a trade in worth $20K that still has a $20K balance on its financing contract. The dealer may accept it in trade, and pay off your balance, but it isn't going to lower the $40K negotiated price on the new car you want, so no sales tax abatement. A cellular carrier can't rebate you sales tax that the state doesn't allow. So there is no scam.

Oh no, dont bring the car thing again into it lol

 

[capitanbuzo]

Only in two states.

In the other 48 states customers should only be paying tax on their agreed upon purchase price and there are only a few states that require it up front.

If you finance a device and your cellular company charges you the full sales tax amount up front but you don't end up keeping it to term, you should be able to request a refund but might have to do it through your state tax board. In any other case, the retailer will refund you the amount so it's strange that the cellular companies are not doing so for their customers. Given that tax laws regarding cellular devices are unique it's not an unreasonable question to wonder whether cellular companies are acting outside the norm.

You still technically keep it to term and are trading the residual value in for the right to buy a new one. You still owe tax on the whole thing. It is really just this straight forward. I don't understand what the fuss is about.

 

[Applejuiced]

I'm not actually seeing it that way.

You'll notice in his original post his contract charged him for an "estimated" tax, which was based on the assumption that he would pay X amount of value over the life of his contract. If he ends his contract, or changes the terms, and enters into a new contract for a new device, he is entitled to be refunded the amount that he did not end up buying.

Even in California, where we are required to pay tax based on the full MSRP of a device up front, if we don't finance the device to term we can apply to the Board and get a refund.

Yes, but its not a returned item like a DVD player you bring it back 2 weeks later and get full price and all taxes back credited to your card.
Cause if I bring back the phone 18 months later the phone is now worth 50% or a lot less of what I bought it depending how much I abused it. So its not really I return it for a full refund 2 years later and I get the tax refunded to me.
The way it works is for example I paid $400 on a $650 phone so far. I give it back to AT&T and they sell it for a $350. In the end they make some money with the used phone sale. Im not returning it for a full refund. That's not the case here.